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In my last post I tried to make the concept of value stream teams accessible to all (cue jazz hands …). I wanted to pay particular attention to the non-technical audience that I felt was being left behind by all the literature on the subject riddled with technical terms and assumptions. Today I want to continue this exploration. Now that we know what value stream teams are, what is it that they should do?
What is the point of the team, what are we working towards?
Previously, we have defined a value stream as a set of activities that need to take place in order to create value for someone, usually a customer. It follows that each value stream team should have a clear value creation outcome in mind. It is hugely important that we focus on outcomes (what change in behaviour do we want to affect in our customer, what job are we helping them get done?) and don’t get trapped talking about output (implement software X, deliver feature ABC).
Unlike in Roman times, not all ways lead to Rome anymore! We cannot possibly predict what activities will actually yield the best results unless we are working on something that has been done many times before, in our exact circumstances, for our exact customer base. Unlikely? Exactly. We could substitute informed learning with a HiPPO: a highly paid person’s opinion. If we do, we may stubbornly pursue a project - an output - irrespective of whether it yields the desired results. This may placate said highly paid person, but we will not have done right by the company if we pursue a specific project irrespective of whether it presents the best possible shot at generating the outcome we are chasing.
Instead, by focusing on a business outcome and bringing a group of people together that make it their life’s (okay quarter’s) mission to get closer to that stated outcome, we’re likely to find better and possibly quicker actions to take that get us closer to our goal. By focusing on, say, an improved operating margin over simply cutting costs we open up avenues of exploration and discussion that would otherwise be unavailable to us. The HiPPO’s pet project may well be one of those actions we decide to pursue, but it should be examined and weighed up against alternatives, chosen for the right reasons, and validated with real-life data.
The “point of the team” is to pursue a business outcome with all skills and knowledge available to them. If skill or knowledge gaps are perceived, the team must be able to supplement their team either permanently or temporarily to ensure best possible results. Utilising their combined skills, knowledge and experience the team brainstorms potential actions to take that may get them one step closer to the business outcome. We tend to call these actions “experiments” because, until implemented and validated, nobody can really know whether they will have the desired impact. All we can do is to make a (very!) well educated guess and look for clues along the way whether we are seeing the results we would expect. If we do, we keep going. If we don’t (and we have taken expected lag into account), we pivot and try another approach. Whatever happens, we remain relentlessly focused on the business outcome.
It can be helpful to phrase your business outcome according to this pattern: We believe that [doing action X] will result in [impact Y]. Not only does this amplify the fact that our business outcome is a hypothesis, but the clarity of structure will help us later as we look for good metrics to measure success.
Where do I get a business outcome from?
Your business outcome should be directly derived from and linked to the company’s business strategy. I have previously explored the steps you can take to create a well-rounded strategic plan. If you have followed these recommendations you will hopefully have a small number of key opportunities that you’d like your business to pursue. A discussion around these opportunities should have led to a number of hypotheses of how to capture these and allow your organisation to reap its rewards. In turn, these hypotheses should have led to a handful of strategic objectives that we need to accomplish in order to capture said opportunities (or indeed fight off any emergent threats the business is facing!). These strategic objectives should be phrased as intended business outcomes and it’s these that you get your team(s) to align behind.
Let’s try to make this more tangible by looking at a concrete example, shall we? Let’s say you are a hospitality business that has traditionally focused on large-scaled hotels in far-flung locations. The pandemic has left you with assets that are operating well below their profitable capacity as people either could not travel, or chose not to, in favour of local options and smaller-scale accommodation options they perceive to be less risky.
There are both threats and opportunities in this situation - the threat that underperforming assets are dragging down your corporate profits and the opportunity to capture a different kind of travel market and diversify your business in the process. You hypothesise that engaging with the local market in your hotel locations, rather than exclusively focusing on attracting international tourists, will allow you to increase capacity and thus improve profitability. To do so, you believe that you have to change your offering to appeal to the local population - it is not clear exactly what that offering may need to look like, but this is where your value stream team can take over and create an attractive offering that appeals to the well heeled, local population. And there you have your first business outcome. Another plan of attack for the same hypothesis may be to support local enterprises by offering their employees a convenient and well-equipped co-working space utilising your under-used hotel facilities. Another business outcome ready for exploration!
What if I don’t have a business strategy
All too often you may be looking for better ways of working or better approaches to running your team(s) without being in a position to influence company strategy - or the creation thereof. Particularly in large organisations this may be happening several rungs above your pay grade and you are not in a position to influence what’s going on “up there”. Senior management may be discussing strategy, and may even have a strategic plan for the business, and it may even be brilliant, but you wouldn’t know because internal communication is lacking and their vision and goals have not been properly embedded within the rest of the organisation. It happens. I’ve been there. (Ehem.)
So what do you do? Look for clues, and ask questions. You’d be surprised how much useful information is contained in reports prepared for those external to the company. What information is contained in your Sales and Marketing materials and what clues does it give as to the underlying strategy your company may be pursuing? Read the annual report (if you are in a publicly-traded organisation) - you’d be amazed how much useful information it contains that you only wish someone internal had told you about!
Take this knowledge and look at the work you’re being asked to do through its lens. Ask questions about why a certain project is being pursued. What is it that we are hoping to achieve by implementing XYZ or targeting a different customer base? Try to move the conversation from output to outcome and ask about indicators of success that you can use as guiding lights (more on those later!) to help you ascertain whether a project is actually yielding the desired outcome. Teach your teams to do the same and start reporting up in a way that shows this different approach. Hopefully, it will make your boss or even your boss’s boss stop and reflect. Point them at this blog to help them make sense of what they’re seeing, or even better, put them in touch and I’ll be happy to help shine the torch! :)
How long should I pursue it for?
Once you have agreed on a business outcome to pursue it is tempting to knuckle down and get some work done. YES.
But.
We want to strike a balance between giving the team enough headroom to make tangible, meaningful progress towards our business outcome and staying responsive to changing market conditions. We don’t want to relentlessly pursue a goal that has become obsolete because the world has changed around us; equally we don’t want to stop just as we’re getting the hang of it and delivering business impact because of “shiny thing over there”.
Quarterly objectives are increasingly becoming the industry norm because 12 weeks of focused work can shift the needle significantly enough to allow us to stop and discuss whether we have done enough and whether as a result there may be other, more pressing priorities we should now pay attention to.
In the spirit of “Stop starting and start finishing” it is important to have these conversations openly and involve the whole team as well as stakeholders in the discussion. The latter may be content that their business impact has materialised, while the team knows that the experiments they conducted in establishing product-market fit has created a technical debt time bomb which will need diffusing if we intend for solution X to become a permanent fixture in the organisation’s toolbelt.
Ultimately every business outcome should be accompanied by a number of measurable success criteria that tell us whether or not we have achieved our objective. It’s those metrics that should provide clues as to how close we are to “being done”. We don’t want to become enslaved to these numbers but they should provide the foundation for and promote good conversation as to when “enough is enough”. Maybe we have reached the point of diminishing returns for the effort level needed and unanimously agree that enough of the benefit has materialised. If so, great - let’s tackle the next problem.
If you are adopting a 12 week cadence, it is good practice to conduct a short stock taking exercise halfway through. This allows you to reflect on the team’s achievements to date (and celebrate them) while also having a targeted conversation as to how to make best use of the remaining time available. From where we are today, what is the best possible outcome we can hope for by the end of the quarter and what work has to be done to make this possible? Are there any obstacles in our way, any risks that give us concern, any dependencies on people or resources outside of our team that may hinder us if left unattended? The goal of the conversation is to re-align the team, establish a shared understanding of the key priorities and clarify everyone’s role in achieving the desired outcome.
Upon successfully completing your quarter, don’t rush straight into the next one. Take a week to reflect on the journey you’ve been on, celebrate the things that have gone well, the impact you’ve had, but also discuss what didn’t go well. What aspects, with the benefit of hindsight, should have been tackled differently? Propose alternative approaches and commit to implementing these, thereby instilling a mindset of continuous improvement within the team. Take some time to review the demand landscape and assess whether your effort during the previous quarter has materialised enough of a business impact that other priorities may now be more pressing. If so, take some time to refine your outcome statement and look for suitable metrics to measure your success. If you are staying your course, then still take some time to review both outcome and metrics and make adjustments as you see fit. You have learnt a lot over the last 12 weeks, allow that knowledge to be reflected in the core statements that (should) govern every aspect of your work! And don't worry - the year conveniently has 52 weeks, otherwise known as 4 x 12 focus weeks + 4 x 1 celebration/reflection/planning weeks!! Even with a week separating your quarters, you’ll get to go after the things that matter, all guns blazing for four full quarters every year!
Next time I’ll be digging into the pesky subject of metrics. These incredibly important beacons of light are crucial in keeping you honest along the way, forcing you to examine whether you are doing the right kind of work, the kind that makes a difference in the real world! As important as they are, and as simple a concept as they may seem, they can prove incredibly challenging to get right and a certain amount of patience and experimentation will be required to create something meaningful. More on that soon!!
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